UBS Analysts Recommend Portfolio Hedges Amid Macroeconomic Uncertainty

UBS Analysts Recommend Portfolio Hedges Amid Macroeconomic Uncertainty

In light of ongoing macroeconomic uncertainties, UBS analysts have advised investors to consider portfolio hedges. While traditionally, gold has served as a reliable safe-haven asset, analysts caution about potential short-term headwinds that could impact its performance.

Gold's Near-Term and Long-Term Prospects

Despite the current challenges, UBS maintains a bullish long-term outlook on gold. The analysts noted that if market expectations for Federal Reserve rate cuts diminish, gold prices could face downward pressure. Spot gold prices ended the week at $2,413.93 per ounce.

However, UBS is optimistic about gold's future, forecasting prices to reach $2,500 per ounce by the end of 2024. This positive outlook is bolstered by strong central bank and investor demand. Additionally, gold's role as a geopolitical hedge has significantly contributed to its price rise this year, offering diversification and reducing overall portfolio volatility.

Oil as a Hedge Against Geopolitical Risks

UBS also emphasizes the importance of oil as a hedge against specific geopolitical risks. With the potential for escalating conflicts in the Middle East, oil prices are expected to remain elevated. UBS projects Brent crude to trade at $91 per barrel in the coming months, driven by robust demand and efforts by OPEC+ countries to maintain market balance.

Conclusion

In an environment of macroeconomic uncertainty, UBS advises investors to consider hedging their portfolios with assets like gold and oil. While short-term headwinds may impact gold prices, the long-term outlook remains positive due to strong demand and its role as a geopolitical hedge. Similarly, oil prices are expected to stay high due to geopolitical tensions and market dynamics.

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